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July 18, 2019

Reaction to the S. American Estimates in the July WASDE Report

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Brazil - The July WASDE report left the 2018/19 Brazilian estimates unchanged at 117.0 million tons for soybeans and 101.0 million tons for corn. Since those are very close or identical to my numbers, I have no problem with either of those estimates.

Brazil soybeans - For the upcoming growing season in Brazil (2019/20), WASDE left their soybean estimate unchanged at 123.0 million tons. During the 2018/19 growing season, the Brazilian soybean acreage increased 2% and I think it will increase 2-3% in 2019/20, but the final acreage could depend on prices and the currency exchange rate. The soybean yields should improve in 2019/20 compared to last year's disappointing yields. Therefore, I have no problem with their estimate of 123.0 million tons for Brazil's 2019/20 soybean production.

Brazil corn - For the upcoming growing season in Brazil (2019/20), WASDE left their corn estimate unchanged at 101.0 million tons. Brazilian farmers increased their safrinha corn acreage 7% in 2018/19. I think the 2019/20 Brazilian corn acreage will increase 7-8% due to good domestic corn prices and the very good results from the 2018/19 safrinha corn crop (see next article).

Brazilian farmers were very happy with the results of their 2018/19 safrinha corn crop, and since that crop accounts for approximately 73% of Brazil's total corn production, I think farmers will be more than willing to invest in more safrinha corn acreage in 2019/20. Therefore, I am OK with WASDE's estimate of 101 million tons for Brazil's 2019/20 corn production.

Any increase in safrinha corn acreage will depend on when the soybeans get planted and harvested. An early start to the soybean planting in Brazil this coming September will automatically translate to an early start to the safrinha corn planting. The earlier Brazilian farmers are able to plant their safrinha corn, the more willing they will probably be to increase their safrinha corn acreage.

Argentina - The July WASDE report left the 2018/19 Argentina soybean estimate unchanged at 56.0 million tons, but they increased the 2018/19 Argentina corn estimate 2.0 million tons to 51.0 million.

Argentina soybeans - The 2018/19 soybean crop in Argentina ended with record soybean yields in many areas. There was one small negative aspect of the crop when heavy rains at the end of the harvest resulted in some additional abandoned hectares. My estimate for the 2018/19 soybean production is the same as WASDE at 56.0 million tons.

For the 2019/20 growing season, WASDE is estimating the Argentine soybean production at 53.0 million tons. I think farmers in Argentina will reduce their soybean acreage slightly in favor of additional corn acreage and the soybean yields in 2019/20 will probably be a little lower than the record yields registered in 2018/19. I am not quite as pessimistic as WASDE concerning the 2019/20 soybean production in Argentina, so I am estimating the crop at 55.0 million tons.

Argentina corn - The 2018/19 Argentina corn estimate was increased 2.0 million tons in the July WASDE report to 51.0 million tons. My current estimate is 49.0 million, but record corn yields keep being reported in Argentina, so maybe I am a little too low in my estimate.

For the upcoming growing season in Argentina (2019/20), WASDE is estimating the corn production at 50.0 million tons. I am a little surprised they have next year's corn production in Argentina 1.0 million tons lower than this year. I think the farmers in Argentina will increase their corn acreage in 2019/20 by 4-5%, but they probably will not repeat the record corn yields registered in 2018/19. Therefore, I am a little more optimistic about next year's corn crop in Argentina and I am estimating the crop at 51.0 million tons.